Posts from — September 2009

Contract activity for pending home sales is on the rise for the sixth month straight.  Such a consistent rise has not been seen in the history of the Pending Home Index since its creation in 2001. 

The Pending Home Sales Index is a projecting indicator that is based on the amount of contracts that were signed in any particular month.  In the month of July, this number increased 3.2% to 97.6.  The indicator number for the month of June was 94.6.

Lawrence Yun, NAR chief economist, said the housing market momentum has clearly turned for the better.  “The recovery is broad-based across many parts of the country.  Housing affordability has been at record highs this year with the added stimulus of a first-time buyer tax credit.”  Other buyers are taking advantage of low home values before prices turn higher. 

Nationally, the typical mortgage payment now takes less than 25% of a middle-income family’s monthly income to buy a median priced home, with payment percentages so far in 2009 being the lowest on record dating back to 1970.  “ As long as home buyers stay within their budget, mortgage payments will be very manageable,” Yun said.  

The National Association of Realtors is predicting that anywhere from 1.8 to 2 million first-time buyers will jump on the $8000 tax credit opportunity.  NAR is also estimating that some 350,000 sales would not have taken place without this tax credit. 

Yun predicts that the number of existing home sales will steadily rise through the fourth quarter.  “Unless the tax credit is extended, no one should be surprised to see home sales drop in the first quarter of next year,” he said.  “However, the fundamentals of the housing market and the economy are trending up, and we expect home sales to generally pick up in the second quarter of 2010.  The buyer psychology may be shifting from, ‘Why buy now when I can purchase later,’ to ‘I don’t want to miss out on a recovery’.”